MyCRA Specialist Credit Repair Lawyers

Tag: refused credit

  • Inside Secrets for the Best Mortgage

    Can we trust everything we believe to be true about applying for finance? We look at some great information to help you get the best deal on your home loan – and look at why a bad credit is something you should know about before you apply for a mortgage, to avoid being refused credit.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    Yesterday I read a great article in the Herald Sun titled “Time To Topple Mortgage Myths”. The article uses the information from top finance professionals to debunk five common mortgage myths. We look at the advice of those finance experts, and give you further advice as it relates to your credit rating and risk assesment. Here is the Herald Sun’s article:

    Myth 1: Lowest interest rate loans are best

    Unfortunately many borrowers will judge one home loan against another simply on the interest rate, which can be a big mistake.

    If they make their decision on this “headline” rate, it could cost them tens of thousands of dollars extra, Resi Mortgage chief executive Lisa Montgomery says.

    “Most borrowers don’t look at the comparison rate but they must,” Montgomery says.

    “Check the comparison rate. It’s a great rule of thumb that helps you understand at a glance the true cost of a loan.
    “It includes all the upfront and ongoing fees that need to be paid during the course of the loan.”

    Fees and charges can add several basis points to the cost of the loan. Read the mortgage contract for all the details.

    Whilst it is true the lowest interest rate may not always be the best, a high interest loan isn’t either. I am referring to a non-conforming loan used by people with negative listings on their credit report (or “bad credit”). In terms of saving money, this is seldom a better option. If there is any inkling that the bad credit shouldn’t be there, you will always save money if you can have your credit rating repaired by a professional credit repairer rather than continuing with a non-conforming loan – even if for only three years. For example, on a $300,000 loan – it would cost you $23,000 more in interest over the first three years at 9% interest, versus a more “mainstream” rate of say 7%. If you have bad credit, you should find out if you are suitable for credit repair before entering a high interest loan.

    Myth 2: Bad credit ratings prevent borrowing

    Your credit rating can both help or hinder the type of mortgage you are offered. If you have a poor record, it does not automatically mean you won’t get a loan.

    But it can mean a lender will consider you a greater risk and want to charge a higher interest rate.

    Not all unpaid bills and default histories will stop you getting the best deal.

    Mortgage broker 1300HomeLoan managing director John Kolenda says defaults on utility bills or phone bills can be explained and overlooked.

    “But it is very important to make sure you tell your lender about your history,” Kolenda says.

    “Don’t let them find out when they do your credit worthiness search.”

    It is not always the case that people are refused a home loan if they have bad credit, but it is never ideal. As mentioned above, depending on how high the interest rate will be – it may make more sense to look at those bills or other defaulted accounts that can be “explained” or which were unfair or mistaken and have them negotiated to be removed so as to get the best deal you can.

    If you do want to discuss your options with your lender while knowing you have bad credit, yes it is very very important to be honest with them about your credit file. But where many people come unstuck and are refused credit is when they don’t know about it before they apply. This surprise bad credit can occur for a number of reasons, maybe the Creditor had the wrong billing address, or the default was a mistake, or you weren’t notified. Either way, it looks bad for you and means you fail that credit worthiness test. Surprise bad credit is often worth investigating to ensure the listing was put there lawfully by your Creditor.

    Myth 3: Offset accounts are the best way to cut your interest

    Financial research company Canstar analyst Mitchell Watson says there are much better ways to cut your interest costs than using an offset account.

    “A lot of people will have their wages or salary paid into a mortgage offset account each month but for the average wage earner this isn’t going to be worth much at all,” he says.

    “An offset account for someone on about $65,000 is only going to save about $20 a month interest. Over the life of the loan, however, it does add up to about $14,000.

    “However, if you make fortnightly payments instead, so you divided the monthly amount by two and pay it every fortnight, you will save about $55,000 over the life of the loan and cut your loan term by four years.

    “Better still, do both – use an offset (account) and fortnightly payments.”

    Myth 4: If you pay off your credit card, you’ll be able to borrow more

    Wrong. Even if you owe nothing on your credit card, the limit will still be counted towards your total potential outstanding debt, according to 1300HomeLoan.

    “Your credit card limit affects your maximum borrowing capacity with some lenders. For that reason, you should reduce your limit or cancel the cards you are not using before applying for a home loan,” Kolenda says.

    Even with new information provided for in our new credit laws which are in the process of going through Parliament, your credit limit, rather than the amount owing will be used to assess your debt level.

    Myth 5: Pre-approved loans are pretty much guaranteed money

    This is not true, the experts say.

    Pre-approval is an offer to lend money based on a percentage of the property’s value.

    The price you pay is not necessarily its value, Montgomery says.

    “Always sign a contract of sale ‘subject to finance’ even if you have a pre-approval,” Kolenda adds.

    “Your valuation needs to stack up and you will still need final approval.”

    Are you sure the lender has done a credit check before providing the pre-approval?

    The best course of action is – prior to applying for a home loan, request a copy of your credit report from Australia’s credit reporting agencies yourself. It is free once every year and will be mailed to you within 10 days. This way, you will know whether your credit file will let you down at the mortgage application stage and you won’t accumulate a ‘credit enquiry’ or any black mark against your name by letting the lender do the credit check and find out too late that you have problems that could have been fixed.

    If you would like help to fix bad credit before applying for a home loan, contact a Credit Repair Advisor on 1300 667 218 or visit our main website for more information www.mycra.com.au.

    Image: Stuart Miles/ www.FreeDigitalPhotos.net

  • Will the spring boom be mowed down by bad credit?

    Spring has almost sprung – which is evident by the sunny weather spanning much of Australia today. We look at what this might mean for the housing market, and why this is the best time for people to get cracking on making sure their credit file comes up smelling like roses.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    Traditionally spring is the season where people dig out the clip-boards and the comfortable buying shoes and go get pre-approval for some serious house-hunting.

    Spring is a great time to buy due to more property on the market – transfers; people planning for moving prior to the new school year; people with pools selling when it’s warmer; and homes generally look prettier in the spring – can contribute to this rise in good stock. And for the same reasons, more buyers can be available at this time, which potentially means more borrowers.

    But RP Data’s Executive General Manager, Craig McKenzie told Australian Broker Online today that the 2012 spring selling season would be largely determined by levels of buyer confidence in the market place. He warned a lack of confidence would hamper activity.

    “Until such time as there is a sustained recovery in the consumer mindset it seems unlikely there will be a vast improvement in sales activity,” he said.

    The Housing Industry Association’s chief economist Harley Dale also echoed this belief.

    “The consistently weak consumer confidence is weighing very heavily on new housing investment, far more so than is the case for retail expenditure,” he said.

    “Combine that low confidence with very tight credit conditions and excessive taxation, and you have the unpalatable recipe for the recessionary conditions facing new housing.”

    I would argue nothing exudes buying confidence like pre-approval for a home loan. But this thinking can sometimes see people come unstuck if they’re not careful. If people don’t know what is said about them on their credit report before they apply for finance – they will find out after. If the news is bad – if they have a bad credit listing there – this would mean they are refused credit, and would also have created a credit enquiry on their credit report. “Tight credit conditions” mean any blemish on the credit report – including too many credit enquiries – can see a person refused credit.

    Most people think if they had any kind of black mark on their credit report they would know about it. But unfortunately “surprise” bad credit is pretty common. Bills and notices get sent to the wrong address; mistakes happen; listings are put there unfairly; or in some cases the wrong person cops the bad credit of someone else entirely. But if people apply for finance and their credit report comes back with nasties – the banks probably won’t be very understanding – they consider these blemishes require them to undertake too much ‘risk’ on the loan.

    In most cases the best way to alleviate bad credit history bringing undone all the hard work and savings that have gone into getting a person ready to buy is by using the free yearly credit report to check that everything on their credit file is as it should be before applying for finance.

    The very people who should be ordering a copy of their free credit report are the people who think their credit file should be returned clear. It only takes 10 days to receive it in the mail, but its piece of mind and ‘confidence’ to know that everything is as it should be.

    No amount of “fast talking” or explaining will take back that credit refusal if it occurs. The only thing that will fix a bad credit listing is to address the credit listing at its source – with the Creditor and if it shouldn’t be there – request its removal.

    But why should people use a credit repairer?

    For people who have ever tried to call up and fix their phone troubles, they can be on hold for hours; they can be passed from one person to another; and in the end, still hang up dissatisfied. Clients say it is a similar situation when trying to dispute a credit listing.

    Most times they are told (eventually) that listings can only be marked paid and cannot be removed. But this is not true. If a listing has been placed unlawfully on a person’s credit file, then it should be removed.

    What it takes to negotiate the removal of a credit listing

    • Ability to review pages and pages of documentation
    • Ability to be patient and go through the proper channels to request documents and information
    • Ability to build a strong case as to why a listing has been placed unlawfully based on client information crossed with relevant legislation
    • Ability to negotiate directly with the people that matter within the company in question
    • Knowledge of how to escalate a complaint when necessary, for the best outcome of the client

    Working within the law, a professional credit repair firm gives people the best chance of completely removing bad credit which should not be there. This way, they can apply for finance with a clean slate – achieving the interest rate of their choice, and saving themselves thousands.

    If someone is dreaming of white picket fences, the best way for them to confidently take charge of their “approvability” is to take charge of their credit file and what is says about them. With a clear credit file, they will be able to confidently apply for pre-approval, without stress, negotiating that best price on the house of their dreams.

    To order a free copy of your credit file, or for more information about professional credit repair contact MyCRA Credit Rating Repairs on 1300 667 218 or visit our main site www.mycra.com.au.

    Image 2: dan/ www.FreeDigitalPhotos.net

    Image 3: anankkml// www.FreeDigitalPhotos.net

  • Comprehensive credit reporting could mean more consumers refused credit

    Comprehensive credit reporting has again come under the spotlight for its potential advantages and disadvantages for lenders and consumers alike. We look at what you should be watching out for with your credit file when the comprehensive credit reporting regime is instigated in the near future.

    By Graham Doessel, Founder and CEO of MyCRA Credit Repairs and www.fixmybadcredit.com.au.

    Last week, Head of Legal at Veda Advantage, Olga Ganopolsky defended the incoming positive credit reporting regime in Broker News, claiming the new laws would help to alleviate consumers inaccurately reporting their credit situation to lenders.

    Ganopolsky argued that the wider array of information available in the new reporting regime will enable lenders to make more informed risk decisions. She claimed the regime carried a “strong link to responsible lending”.

    “When research is done on bankrupts, the astonishing results were that more than 95% of people in bankruptcy were applying for credit virtually on the eve of bankruptcy. A lot of even solid credit individuals don’t provide accurate credit information. Just under 20% of people don’t accurately report,” Ganopolsky said.

    Critics of the regime say it violates consumers’ privacy and places the burden of proof on consumers should lenders make a mistake. And though Ganopolsky claimed the regime would enable more responsible lending decisions, NSW Consumer Credit Legal Centre director Karen Cox has pointed out that a positive credit reporting regime existed in the United States during the subprime mortgage crisis,” Broker News reports.

    The introduction of additional information onto consumer credit reports in Australia is unfortunately not going to impact consumers in a ‘positive’ way.

    Unfortunately, the new comprehensive credit reporting regime just opens another door for creditors to inaccurately report information on consumer credit reports – but this time there is no forewarning.

    The information can be recorded if payments are one day late. One of the major issues we have with the proposed new laws is the ability for creditors to list late payments on a person’s credit file.

    Under current Australian credit reporting legislation, late payments are not noted on a person’s credit file until they pass to the ‘default’ stage – which is more than 60 days in arrears.

    The creditor is also bound to fulfil a series of requirements to give the consumer the opportunity to rectify the situation before listing the default – and are bound to notify the consumer of their intentions to ultimately ‘list’ the late payment of 60 days or more as a default on the consumer’s credit file.

    This legislation will remain, but the Government also proposes the introduction of the ability for creditors bound by the NCCP to make late payment entries on a person’s credit file if their payments are late even as little as one day.

    So all the rigorous Australian credit reporting laws for listing defaults remain, except a creditor can now tarnish a person’s credit file with late payment ‘notations’, which would surely have a big impact on their ability to obtain credit. If the late payment of a few days is due to delays in bank processing of transfers or direct debits, paying at Australia Post, BPay etc. – these things are beyond the control of the average consumer yet that is exactly who will get hurt.

    There can be a host of reasons why a consumer makes a payment late – illness, holidays even simply the mail going astray – but we don’t believe this reflects unduly on the consumer’s ability to service a loan – but will it?

    In these harsh economic times, any negative listing impacts a person’s ability to get a home loan. Even excess credit enquiries. So the ‘noting’ of late payments on a person’s credit file could mean they are refused credit.

    Creditors make mistakes every day when it comes to listing defaults and other official ‘negative’ listings on credit files. Luckily the consumer has an extensive legislative framework and system of redress should the creditor get it wrong and their credit file happened to be reported unfairly or inaccurately.

    Who is going to be the watchdog when it comes to these late payment ‘notations’? As is currently the case, it is up to the consumer to check the accuracy of their own credit file. What system of redress will be in place if they find a creditor has listed a ‘late payment’ on their credit file unfairly or incorrectly?

    We guess the old adage will remain – consumers will continue to be responsible for the information that is reported about them by creditors on their credit file.

    With this in mind it will continue to be essential for consumers to check the accuracy of their own credit file on a regular basis – and particularly before they apply for any credit.

    Refused credit? We can help!

    For more information on your credit file, or to obtain a free copy of your credit file, contact MyCRA Credit Repairs tollfree on 1300 667 218 or visit www.fixmybadcredit.com.au.

    Image: Ambro/ FreeDigitalPhotos.net